Extended period of limitation cannot be invoked on a legitimate buyer

Last updated: 04 July 2023

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The CESTAT, Kolkata has ruled that a buyer who has paid valuable consideration for goods cannot be subjected to an extended period of limitation for excise duty recovery unless their involvement in fraud is proven. In this case, the appellant had claimed CENVAT credit based on duty-paid invoices for machinery purchased from a registered supplier. Despite allegations of fake invoices and non-receipt of machinery, the tribunal found the department failed to prove the buyer's fraud or receipt of goods from an alternative source. The ruling emphasised that legitimate transactions, supported by proper documentation and payment, should not be penalised under extended limitation provisions without clear evidence of complicity.

Court :
CESTAT, Kolkata

Brief :
The CESTAT, Kolkata in M/s Jai Balaji Industries Limited v. Commissioner of Central Excise [Excise Appeal no. 9 of 2011 dated June 26, 2013] had set aside the order demanding excise duty and held that the buyer who has paid a valuable consideration could not be proceeded upon by taking the aid of a larger period of limitation as per Section 11A(1) of the Central Excise Act, 1944 unless it is proved that the buyer was also involved in fraud.

Citation :
Excise Appeal no. 9 of 2011 dated June 26, 2013

Daily Limit Reached